Gounder; Secretary, Department of Social Services and (Social services second review)
[2020] AATA 4909
•4 December 2020
Gounder; Secretary, Department of Social Services and (Social services second review) [2020] AATA 4909 (4 December 2020)
Division:GENERAL DIVISION
File Number(s): 2020/3695
Re:Secretary, Department of Social Services
APPLICANT
AndBal Gounder
RESPONDENT
DECISION
Tribunal:Chris Puplick AM, Senior Member
Date:4 December 2020
Place:Sydney
The determination of the AAT1 made on 8 May 2020 is set aside, and in substitution it is determined that the Respondent’s claim for Special Benefit made on 26 September 2019 should be rejected.
....................................[sgd]....................................
Chris Puplick AM, Senior Member
CATCHWORDS
SOCIAL SECURITY – Special Benefit – long term available funds test – whether Respondent’s expenditure was unavoidable and reasonable – whether lump sum compensation payment to Respondent’s spouse should be taken into account – decision set aside
LEGISLATION
Social Security Act 1991 (Cth) ss 4, 8, 729, 1172
CASES
Cocks v Centrelink [2000] FCA 1248
Hawkins and Secretary, Department of Social Security [1996] 44 ALD 651
Jatan and Secretary, Department of Families, Community Services and Indigenous Affairs [2006] AATA 229
Kazmierczak and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084
Khan and Secretary, Department of Social Services [2014] AATA 298
Klein v Domus Pty Ltd (1963) 109 CLR 467
Noel Garth Baptist and Director-General of Social Security [1984] AATA 128Young v Queensland Trustees Ltd [1956] 99 CLR 560
SECONDARY MATERIALS
Guide to Social Security Law
REASONS FOR DECISION
Chris Puplick AM, Senior Member
4 December 2020
This application
In this matter, the Secretary, Department of Social Services (the Applicant) is appealing to this Tribunal to set aside a decision of the Social Services and Child Support Division of the Tribunal (AAT1) which, on 8 May 2020, determined that Mr Bal Krishna Gounder (the Respondent) was eligible to receive payment of Special Benefit under section 729 of the Social Security Act 1991 (Cth) (the Act).
Status of the Respondent
The Respondent was born in 1953 and arrived in Australia in 2013. He became a citizen in 2019. Although being over the age of 65 years he is not eligible for the Age Pension until he completes ten years of residency in Australia in 2023. His having reached the age of pension eligibility (although not the residency requirement) meant that his previous payments of Newstart Allowance were cancelled in April 2019. He married Ms Kaliamma in 1976 and they have been a couple since that date.
The issues with Special Benefit
In short, Special Benefit (SpB) is a payment of “last resort”[1] made available, at the discretion of the Secretary,[2] to people who are otherwise not eligible for any other income support payment and are faced with the prospect of financial hardship. It is assessed and administered in accordance with the guidelines laid down in the Guide to Social Security Law (the Guide) which provides, inter alia, that SpB is not available to people who have access to available funds in excess of $5,000 regardless of their status as a single person or a member of a couple.[3]
[1] Jatan and Secretary, Department of Families, Community Services and Indigenous Affairs [2006] AATA 229 at [21]
[2] The Act section 729(2).
[3] The Guide at 3.7.1.70.
The Guide describes these funds as “liquid funds” (see discussion below) and further provides that to be eligible for SpB a person must “be in financial hardship and unable to obtain or earn sufficient livelihood for themselves and any dependent.””[4]
[4] Ibid at 3.7.1.10.
Section 729 of the Act relevantly provides:
729 Qualification for special benefit
(1) A person is qualified for a special benefit for a period if the Secretary determines, in accordance with subsection (2), that a special benefit should be granted to the person for the period.
Note: Special benefit is a discretionary benefit and is available only to a person who is not able to get any other income support payment (see paragraphs (2)(a) and (b) below).
(2) The Secretary may, in his or her discretion, determine that a special benefit
should be granted to a person for a period if:
(a) no social security pension is payable to the person during the period;
and
(b) no other social security benefit is payable to the person for the
period; and
…
(e) the Secretary is satisfied that the person is unable to earn a sufficient livelihood for the person … because of age, physical or mental disability or domestic circumstances or for any other reason…
The issue before the Tribunal is whether or not, at the time the Respondent made the claim for SpB on 26 September 2019, he had access to available funds in excess of $5,000.
It should be noted that the Applicant does not dispute the proposition that the Respondent is otherwise unable to earn a sufficient livelihood due to his medical conditions.[5]
[5] Applicant’s Statement of Facts, Issues and Contentions (SFIC) at [6.13].
There is a further qualification to be noted which relates to the question of how a person comes to be in a position of “hardship” potentially triggering eligibility for the payment of SpB to alleviate that condition. The Guide, which imposes the terms and conditions for social security payments, provides:
3.7.1.30 Assessment of SpB claims
…
Circumstances leading to hardship
SpB is only payable where a person is unable to earn sufficient livelihood. The person's circumstances must be carefully considered to determine whether their inability to earn a sufficient livelihood was unavoidable or reasonable or whether they have placed themselves in financial hardship by:
…
· spending their money on unnecessary items, or
· disposing of money, by gifting or other means without adequate return.
· SpB should NOT be paid if the delegate believes the person could have avoided the situation of financial hardship.
A series of Special Benefit claims
The 26 September 2019 claim for SpB (the relevant claim) was the second such claim made, the first having been made on 26 April 2019 (the first claim). This first claim was rejected by a delegate of the Secretary of the Department on 29 April 2019 on the basis that the Respondent had access to funds in excess of $5,000 at that date.
On 10 October 2019 a delegate decided to reject the relevant claim and the Respondent applied to the AAT1 for that decision to be reviewed. On 16 January 2020 an Authorised Review Officer (ARO) affirmed the initial rejection decision. This led to the AAT1 decision of 8 May 2020 which set aside the ARO’s decision. It is against that decision which the Applicant appealed on 15 June 2020 and in the interim the AAT1 decision was stayed (on 6 July 2020) until a decision is made by this Tribunal. The matter was heard by this Tribunal on 12 November 2020.
On 13 January 2020 the Respondent made a third claim for SpB (the third claim) which was rejected on 31 January 2020 when a delegate determined that he “did not meet the conditions for a hardship payment”.[6] This application is not in issue before the Tribunal in these proceedings.
[6] Tribunal Documents at [168].
The Respondent’s financial position
At the date of the first claim it was indicated that the Respondent’s wife (Ms Kaliamma) held two bank accounts with the ANZ Bank. The first (Account 1) held a total of $29,677.22 and the second (Account 2) held $737.53. At that time, it was represented to the Department that Account 1 was held 100% in the name of Ms Kaliamma and Account 2 was a 50/50 joint account.[7]
[7] Tribunal Documents at [72]. Form dated 21 April 2019.
It transpired subsequently that Account 1 was actually a joint account.
The Tribunal accepts that the Respondent may not have complied fully with all notification requirements.[8] However, given the personal circumstances of the Respondent in terms of his poor health[9] and his stated limited understanding of the details of the questions on the relevant SpB application form,[10] the Tribunal does not accept that this was in any way an attempt to mislead or deceive the Department. There is no evidence to support such a conclusion.
[8] Applicant’s Statement of Facts, Issues and Contentions at [10.6], [10.8]; [10.9].
[9] Respondent’s SFIC at [2.34] – [2.37].
[10] It was also the Respondent’s evidence that he did not personally complete this form but had assistance from a senior colleague of his at the Liverpool Blood Bank where he worked as a volunteer.
Between the date of the first claim and the relevant claim, Account 1 diminished from $29,677.22 to the sum of $3,471.12 and the Account 2 balance rose to $840.29.
The principal relevant items of expenditure in that period were: payment for several overseas holidays taken by the couple ($13,080); the repayment of a loan to family members ($10,000); the purchase of household furniture ($1,400); and eyeglasses for the Respondent ($1,230).
It is relevant to note that the bulk of the money in Account 1 derived from a payment made to Ms Kaliamma by way of compensation for a motor vehicle-based injury which she sustained in 2015. She received a compensation/damages award of $36,410.00 of which, after deductions for legal fees and other expenses, she received a net amount of $28,916.00.[11]
[11] Applicant’s SFIC at [2.7].
When the Respondent made the third claim, he informed the Department that his wife was in receipt of Newstart Allowance; that he was receiving no income and that Account 1 now held only $13.68 and Account 2 held only $350.83.
The opposing contentions
In summary:
(a)The Applicant contends that the Respondent deliberately spent money on non-essential items (such as travel, loan repayments and furniture) in order to reduce his available source of funds to below the $5,000 threshold set for eligibility for SpB;
(b)The Respondent contends that in the first instance some of the items of expenditure were legitimate (i.e. not non-essential) and that, critically, the quantum of money allegedly available to the Respondent should not include any part of the compensation payment made to his wife which should be regarded as exempt from consideration under section 1172 of the Act.
Approach to determination
In order to determine this matter, the Tribunal needs to resolve three questions:
a)What were the sums of money available to the Respondent at various times in relation to his claim for SpB, in particular at the time of his September 2019 claim which is the claim under review?
b)Were any of the withdrawals from the pool of funds available to the Respondent some form of necessary and appropriate expenditure?
c)Were any of the funds in the accessible pool in any way exempt from consideration as being available to the Respondent?
The quantum of long term funds available
The Guide defines such long term available funds as being primarily liquid assets which, in turn are defined as including (relevantly in this case and excluding irrelevant sources):[12]
·payments from previous employment,
·cash on hand,
·money in a bank or other financial institution,
·shares, debentures and other investments,
·other money obtainable at short notice,
·compensation payments,
·income support payments due within the fortnight from date of lodgement,
·the liquid funds of a partner.
[12] Social Security Guide at 3.7.1.70 and 1.1.L.60.
The bank records before the Tribunal show the following:[13]
[13] There are minor discrepancies with the figures given in the SpB application forms, but nothing of consequence.
23. Date
24. Relevance
25. Account 1 $
26. Account 2 $
27. T Documents
28. 26.04.19
29. First SpB claim
30. 23,785.44
31. 1,060.64
32. 219 / 240
33. 26.09.19
34. Second SpB claim
35. 2,971.12
36. 1,148.92
37. 226 / 245
Withdrawals from the pool
As noted above, the Respondent claims that there were four categories of expenditure which legitimately reduced the liquid funds available to him at the time of the relevant claim. In order for these expenses to be acceptable as expenses diluting the quantum of funds available, they must meet the test of being “exceptional or unforeseen expenses…that are not ongoing or recurring”.[14]
[14] The Guide at 1.1.E.140.
Two of these were as follows:
(a)Payment of $1,230 for eyeglasses. The Applicant accepted in the Tribunal hearing that this was a legitimate expense on the part of the Respondent and that the sum in question should be deducted from consideration of the level of liquid assets.
(b)Payment of $1,400 for household furniture. This (verified) expenditure encompasses the purchase of a dining table and chairs which replaced a table, described in evidence as having been “collected off the street”, and a sofa bed described as being a “Justin 2 ½ seater with foam fabric” and as “floor stock clearance.” [15] The Applicant contends that “There is no evidence that the expenditure on household furniture was avoidable, reasonable, exceptional or unforeseen”.[16] No evidence is presented to support this proposition – it is merely asserted. To the extent that a modest household requires such items in order to provide for ordinary living, and noting that neither item was extravagant,[17] the Tribunal accepts that this expenditure was such that it should be discounted from the liquid funds pool.
[15] Tribunal Documents at [122].
[16] Applicant’s SFIC at [7.6].
[17] Table/chairs discounted from $699 to $600 and being “self assembles” and the sofa bed discounted from $699 to $550 – see Tribunal Documents at [122].
The other two items of discretionary expenditure involved are of a much more substantial nature and require more detailed examination.
Repayment of Loans
The Respondent claims that on 18 April 2019 he made repayments totalling $10,000.00 to his daughter (Ms Sheetal Gounder) and his “cousin brother” (Mr Sada Reddy).[18]
[18] Tribunal Documents at [187].
Ms Gounder’s loans were made “in small amounts of $200 to $500 as needed to help them with their daily life and their medical requirements.” The loans started at the time of her mother’s accident and totalled some $5,000.00 of which they “returned $4000 to me last year as they had some money.”[19]
[19] Ibid at [192].
Mr Reddy made loans initially at the time of Mrs Kaliamma’s accident which help tide the couple over until her compensation payment was finalised. They continued thereafter and reached the sum of $6,000.00 which was repaid.[20] They were given “after the accident of his wife since they had financial difficulties. His wife needed regular medical attention and the visits to specialists and the need for medication was becoming unaffordable to them.”
[20] Ibid at [193].
The Applicant disputes that these payments should be treated as debts needing to be repaid at the time which they were. It states:
The evidence with respect to loans by Sheetal Gounder and Mr Reddy to Mr Gounder, is vague. The evidence is also consistent with financial assistance based on love and affection, and Sheetal Gounder’s and Mr Reddy’s financial capacity to assist.[21]
[21] Applicant’s SFIC at [9.3].
“Love and affection” there may be – but that does not diminish their status as loans.
Further, the Applicant states:
9.5 This reason for paying $10,000 to Sheetal Gounder and Mr Reddy on 18 April 2019 is nconsistent with a legal obligation to repay loan amounts in accordance with repayment terms in loan agreements. The Secretary contends that the $10,000 paid to Mr Gounder by Sheetal Gounder and by Mr Reddy was not in accordance with loan agreements.
9.6 There should be analytical rigor in determining whether there were loans, and loan repayments. If the Tribunal is satisfied that:
(a) there were loan agreements between Mr Gounder as a borrower, Sheetal Gounder and Mr Reddy as lenders;
(b) the amount of the loans was approximately $10,000;
(c) the purpose of the loans was for Mr Gounder’s and Ms Kaliamma’s day-to-day necessary living expenses, such as food, utility payments, rent and medical expenses, which they could not otherwise afford to pay but for borrowing $10,000 from those family members; and
(d) Mr Gounder repaid the family member lenders $10,000 on 18 April 2019,
then the Tribunal should not count the $10,000 for the purpose of the long term available funds test.
9.7 In those circumstances, the $10,000 should be treated in the same way as the $1,230 spent by Mr Gounder for eye glasses on 25 June 2019.
9.8 Even if the Tribunal is satisfied that there were loan agreements, the Tribunal cannot be satisfied on the evidence to hand that Mr Gounder repaid the family member lenders $10,000 on 18 April 2019.
In oral submissions to the Tribunal, the Applicant’s representative stressed that there were certain conditions which needed to be satisfied if, according to the common law, a bona fide loan situation had been created. He pressed the Respondent on whether or not any such arrangement had been reduced to writing, whether there was clarity on when any loan was to be repaid, whether detailed records had been kept of the dates and amounts in question, and finally whether or not receipts had been issued.
What this does, is ask the Tribunal to ignore the lived realities of families helping each other in time of stress. It is not uncommon for intra-familial loans to be entered into without the formalities which might otherwise attend upon such arrangements.
Nevertheless, loans beget repayments. It is not necessary that the details of loans be set out in writing. In Young v Queensland Trustees Ltd the High Court said simply:
“A loan of money payable on request creates an immediate debt.”[22]
[22] [1956] 99 CLR 560 per Dixon CJ, McTiernan and Taylor JJ.
There is no reason to doubt that there was a debt. Equally there is no reason to believe that it was not repaid on 18 April 2020 as this is consistent with bank records which show that on 18 April 2019 two sums of $5,000 each were withdrawn from Account 1.[23] Ms Gounder’s letter is dated 22 April 2020, and indicates that she was repaid $4,000 “last year”. Mr Reddy’s is dated “7 October” (presumably 2019) and indicates that he lent the couple money at various times after Ms Kaliamma’s accident, totalling around $6,000, and that the money had been repaid.
[23] Tribunal Documents at [217].
It may well be that neither Ms Gounder nor Mr Reddy asked for the money to be paid that day but there is no evidence one way or the other to elucidate that point.
There is however a cultural point to be made, and one which the Tribunal accepts carries some weight. Both the Respondent and his wife spoke of their concerns about having to rely upon their children for financial support. They spoke of their embarrassment at taking money when their children were faced with responsibilities of their own, including the need to look after their own children and manage mortgages. Mrs Kaliamma was distressed at the thought of “having to rely permanently on my children”. The evidence is that apart from the regular payments by Ms Gounder, the couple also receive regular $300 per month payments from their son.
However, what was important was the Respondent’s statement to the effect that while he might never have the ability to repay his son, he had a “duty” to repay his daughter because Hindu families do not take money from daughters, they provide for them. In this respect the Respondent is like the applicant in Baptist of whom that Tribunal remarked:
His overall position was one of great need…he borrowed from his children with some embarrassment which he palliated by his repayment effort.”[24]
[24] Noel Garth Baptist and Director-General of Social Security [1984] AATA 128.
Overseas holidays
During the course of 2019 the Respondent and his wife travelled overseas three times. On the first occasion they visited Fiji during May where they incurred expenditure in the vicinity of $3,580.00. The second trip was in August to Malaysia and Singapore, with expenditure of some $7,800.00. Finally, they visited New Zealand in October/November, spending $1,700.00 on flights which they booked in August 2019.[25]
[25] Tribunal Documents at [185]-[187] and Ms Kaliamma’s Statement dated 6 November 2020.
The purpose of the Malaysia/Singapore trip centred around Ms Kaliamma’s desire to visit certain temples (originally planned for India) to pray and thereby contribute to an improvement in her health. The trip to New Zealand was to visit Ms Kaliamma’s siblings.
Neither trip could be described as anything other than discretionary and neither had any exceptional or unforeseen elements in the expenditure. They cannot be counted as constituting expenses which could reasonably be deducted from the pool of available funds.
The trip to Fiji was undertaken to visit the Respondent’s 87-year old mother who had become unwell. It is clear that the expenditure on the trip included two airfares at $640.00 each and a number of related expenses once in Fiji. These included expenses to purchase medicine for the Respondent’s mother ($200.00) and accommodation expenses which the Respondent told the Tribunal was paid to his brother with whom they resided ($250.00). There were also expenses for items such as “fish”, “liquor” and “kava”.
The Tribunal accepts that it was an unexpected and exceptional necessity for the Respondent to travel to Fiji to visit his ailing mother. A good son would do no less. It was not however necessary for his wife to travel with him whatever her feelings of affection for her mother-in-law. While in Fiji it was not necessary for there to be payment made to his brother, no matter how fraternally offered, and certain expenses for fish, liquor and kava are not unexpected or exceptional items. None of these should be regarded as legitimate deductions. The Tribunal accepts that expenditure of $1,000 (the airfare, medicine and necessary incidentals) from the pool of available funds should be allowed.
In summary, the Tribunal finds that the following expenses were exceptional or unforeseen expenses that were not ongoing or recurring:
·$1,230.00: eyeglasses;
·$1,400.00: household furniture;
·$1,000.00: trip to Fiji; and
·$10,000.00: repayment of loans.
Resulting calculations
There was a great deal of evidence put before the Tribunal as to how and why the Respondent had spent money from the joint bank accounts in the period between the April and September 2019 SpB applications. In essence, the Applicant claims that the Respondent engaged in a deliberate strategy to “run down” his available and accessible funds in order to fall below the $5,000 SpB threshold.
The Respondent states that he was somehow “advised” by the Department that he could reapply after the April rejection, at some time when his funds were below the $5,000 threshold.
Much was said to turn upon departmental records created on 6 and 7 May 2019. They read:
Customer contacted LIVERPOOL on 6 MAY 2019 regarding Review of Original Decision for Appeals…
The decision has been explained to the customer from the documentation/coding on record.
The customer has requested a further explanation of the decision. Customer’s newstart allowance was cancelled due to age and Age pen was rejected due to residency, customer doesn’t have any income support so wants to know the SPL rejection. I’ve already explained it’s due to not in hardship and his bank account balance but still need [sic] more clarification.[26]
…
Contacted customer 07/05/2019 at 10.10am.
Advised customer claim rejected due to POLICY – 3.7.1.70 Long Term Available Funds Test for SpB.
“If the person’s available funds are more than $5,000, Then SpB is NOT payable regardless of partner’s status or the number of dependents. No preclusion period applies, and the claim should be rejected.”
Advised customer they can lodge a claim in the future if their funds reduce below $5000 however the delegate will need to establish thy [sic] have not deliberately placed themselves in hardship.
If their funds are depleted by any large purchase, they are required to produce confirmation of that purchase and if the purchase was not an exceptional or unforeseen expenses, then their liquid funds will be deemed to include the amount of the purchase.
Customer had no further questions.[27]
[26] Tribunal Documents at [262]. Record dated 6 May 2019.
[27] Tribunal Documents at [262]. Record dated 7 May 20199.
It is put to the Tribunal by the Applicant that the Respondent understood this advice clearly and so deliberately reduced his pool of available funds, making sure to keep all the receipts which would justify their expenditure.
It may well be however that the Respondent was confused because there is a further departmental record of 10 October 2019 where there was discussion of a “preclusion period”. Such a period is calculated under the Guide at 3.7.1.60:
Person's available funds minus (the maximum applicable rate of SpB plus FTB), divided by the weekly rate of payment.
This is expressed, in the file note dated 10 October 2019, as “46 fortnights before needing to claim Special Benefit.”[28] (The Tribunal notes that the Department appears to have applied the short-term available funds test (which involves a preclusion period) to these calculations rather than the long-term available funds test which would have been the correct test to apply.)
[28] Tribunal Documents at [265].
The Tribunal accepts that this advice would have made the Respondent aware that, at some stage, his access to funds would diminish to the point where an eligibility for SpB would be established.
It is also put to the Tribunal on behalf of the Respondent that the Respondent did not understand this advice fully, but rather, took it to mean that if large scale and receipted expenditure occurred and the available pool was reduced below $5,000 then at some future time, a new claim for SpB would be entertained.
It is actually not necessary to resolve this conflict regarding motivation, behaviour or misunderstanding. This is a matter which must be decided objectively and the only question is whether the Respondent had access to liquid funds of more than $5,000 at the time of the relevant claim and, in the event that he did not, whether this was the result of his own action which had:
placed himself in financial hardship by, amongst other possible actions, “disposing of money, by gifting or other means without adequate returns.”[29]
[29]Khan and Secretary, Department of Social Services [2014] AATA 298 at [12] referencing the Guide at 3.7.1.30.
Excluded resources
Before that question is answered, it is necessary to consider the third issue identified above, namely were any of the couple’s joint funds exempted from consideration as being part of the resources available to the Respondent?
The starting point for the discussion is to recall that the bulk of the money in the couple’s joint account arrived there as a result of the compensation payment received by Ms Kaliamma in September 2018 ($28,916.00).
The AAT1 characterised this money as being “hers” and said that “Mr Gounder’s wife was entitled to spend her money in any way she wished.”[30] The Applicants says, respectfully, that the AAT1 erred and the money was in effect not “hers” but “theirs” and Mr Gounder was as entitled to make use of it as was his wife.
[30] Tribunal Documents at [6].
It was then submitted that the Tribunal needed to consider the provisions of section 1172 of the Act which provides
Lump sum compensation not counted as ordinary income
If an amount of a compensation affected payment is not payable to a person under section 1169 because the person has received a lump sum compensation payment, that lump sum compensation payment is not to be regarded as ordinary income of either the person or the person's partner (if any) for the purposes of a provision of this Act, other than point 1071A-4.” [emphasis added].
The Respondent’s position then develops thus:
(a)SpB is payable under the provisions of section 729 of the Act with a discretion to pay in s 729(2);
(b)Section 729 is a “provision of this Act”; and hence
(c)Section 1172 applies to section 729 generally and section 729(2) particularly.
The Respondent then goes on to assert that:
2.3 Section 1172 precludes a lump sum compensation payment from being “regarded as ordinary income”. “Ordinary income” is defined as “income” that is “not maintenance income or exempt lump sum” (as defined in section 8(1) of the Act).
2.4 Ms Kaliamma’s compensation payment does not fall within the meaning of maintenance income or the meaning of an exempt lump sum under the Act. [31]
[31] Respondent’s Supplementary Submissions (17 November 2020).
Importantly, for the Respondent, the definition of income in section 8(1) has a particular focus, namely funds derived or received by the person “for the persons’ own use or benefit”.
"income" , in relation to a person, means:
(a) an income amount earned, derived or received by the person for the person's own use or benefit; or
(b) a periodical payment by way of gift or allowance; or
(c) a periodical benefit by way of gift or allowance;
but does not include an amount that is excluded under subsection (4), (5) or (8).
[emphasis added]
The conclusion drawn by the Respondent is that Ms Kaliamma’s compensation moneys cannot be regarded as income or funds available for her husband’s “own use or benefit.”
The Long Term Available Funds test in section 1.1.L.90 of the Guide provides:
For the purposes of SpB, the long term available funds test is an assets/income test which precludes payment to a person who has more than $5,000 in available funds.
This definition does not confine itself to reference to “income” only but includes “assets”.
The term “asset” is defined in section 1.1.A.290 of the Guide to include (inter alia):
financial investments including
·cash
·bank, building society and credit union accounts
·term deposits
The Applicant’s position is essentially that the section 1172 prohibition is limited to such compensation funds being regarded as “ordinary income” whereas the long-term available funds test requires consideration of “available funds”. That brings back into consideration the list of what constitutes “liquid funds”, meaning funds to which a person has ready access because those are, by definition, assets for the long-term available funds test.
It also requires the Tribunal to bear in mind that the Respondent is a member of a couple as defined by section 4(2) of the Act. There is no reason to doubt this proposition. The raison d’etre of there being a definition of a couple in social security legislation is that members of a couple are expected to pool and share assets[32] and upon that basis payments of benefits at single and married rates are determined differently. The pooling of resources is seen as central to both the definition of marriage and the payment of benefits in social security legislation.[33]
[32] Hawkins and Secretary, Department of Social Security [1996] 44 ALD 651 at [652]; Kazmierczak and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084 at [39]-[42].
[33] Cocks v Centrelink [2000] FCA 1248 at [12].
It is not clear whether the Respondent himself has made, or is on the position to make, any significant contribution to the pool of resources available to the couple. Nevertheless, he has access to it and has made use of it.
To that extent, the concept that there is a separate portion of the joint pool that can be said to “belong” to Mrs Kaliamma and not to the Respondent, the basis upon which the AAT1 proceeded, does not, in the opinion of this Tribunal, comport with the provisions of the Act, nor indeed the basis upon which social security legislation, as it touches upon couples, is based. None of the funds in the joint accounts are assets which the Respondent is not able to access and use for his own benefit.
The next question the Tribunal must consider is whether the Respondent’s assets, which include the joint assets, contained a quarantined amount of money (Ms Kaliamma’s compensation payment) as argued by the Respondent on the basis of section 1172 preclusions.
The Tribunal is unable to reach that conclusion. In the first instance, there is no authority in any previous decisions of this Tribunal or the Courts which appear to address the issue in the terms advanced by the Respondent.
Secondly, the pool of resources constitutes an “asset” as referenced in sections 1.1.A.290 and 1.1.L.90 of the Guide. The long term available funds test references both income and assets in terms of definition, so that even if the compensation moneys were found not to be “income” available for the use or benefit of the Respondent, they would still be an asset available for such purposes. They also constitute liquid funds which include (as per the definition in the Guide) cash on hand or money in the bank.
Findings
Based on the above the Tribunal makes the following findings:
(a)at the time of the Respondent’s initial application for SpB (April 2019) he had access to funds, jointly held with his wife, in the order of (rounded) $24,845.00 and his application was properly rejected as he had access to funds in excess of $5,000;
(b)at the time of the current application for SpB (September 2019) he had access to joint account funds in the order of (rounded) $4,119.00;
(c)the dilution of the Respondent’s pool of assets between April 2019 and September 2019 resulted from a number of expenditure items, undertaken between those dates, of which the Tribunal has determined $13,630 were items which could be classified as “exceptional or unforeseen” and are thus properly taken to have been expended in a way which reduced the funds available to the Respondent;
(d)in the period between the two applications the Respondent also incurred major expenditure in the order of (rounded) $12,080.00[34] on items which were neither exceptional nor unforeseen. They must be taken (back) into the calculation of funds available to the Respondent to the extent that this precludes him from accessing SpB, and “hard as it is”[35] they must be taken as expenditure which has contributed to putting the Respondent in a position of financial hardship through his own actions.
[34] Being the balance of the expenditure on the Fiji trip ($3580 less $1000 = $2580); the Malaysia/Singapore expenses ($3,075 + $4,725 = $ 7,800); and the New Zealand expenses ($1,700).
[35] Re Department of Social Services and Richard James Moore [1990] AATA 215 at {18}.
The Tribunal does not, in any way, find that that the Respondent acted in a deliberate or dishonest fashion, nor that he wilfully and knowingly withheld relevant information from the Department. There is nothing in the evidence which goes to the personal discredit of the Respondent or members of his family. The Tribunal accepts that there may have been a genuine misunderstanding of advice given by the Department to the Respondent, although it finds, equally, that none of the advice given was less than accurate and that it was in accordance with both relevant law and policy.
Result of findings
The Tribunal finds that at the time of the Respondent’s application for SpB in September 2019 he should have been assessed as having access to funds in the order of some $16,199. This is comprised of the $4,119.00 joint savings and the $12,080.00 non-essential expenditure incurred between the first and current SpB claims. This was clearly in excess of the $5,000 limit prescribed by the Guide as establishing eligibility for payment of SpB.
The Tribunal, however, draws the attention of the Secretary to the fact that the discretion vested in her by section 729(2) is cast in the broadest of terms, allowing for the sort of flexible response to individual circumstances which was discussed by Dixon CJ in Klein,[36] and which, in this instance, it might not be inappropriate for her to exercise.
[36] Klein v Domus Pty Ltd (1963) 109 CLR 467 at [14].
DECISION
The determination of the AAT1 made on 8 May 2020 is set aside, and in substitution it is determined that the Respondent’s claim for Special Benefit made on 26 September 2019 should be rejected.
I certify that the preceding 91 (ninety-one) paragraphs are a true copy of the reasons for the decision herein of Chris Puplick AM, Senior Member
..............................[sgd]..........................................
Associate
Dated: 4 December 2020
Date(s) of hearing: 12 November 2020 Date final submissions received: 17 November 2020 Solicitors for the Applicant: Dr S Thompson, Services Australia Solicitors for the Respondent: Mr D Turner, Welfare Rights Centre
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